Search form

Main menu

Now’s the time to start a savings plan

April is financial literacy month, and what a better way to celebrate than starting a savings plan.

No matter your stage of life, it’s important to have savings: Whether it’s for a special purchase, a college education, your first home, retirement, or an emergency fund. But just how do you get started and stay on course? Here are a few tips to help you reach your savings goal.

Create a budget. The first step toward taking control of your financial life is to evaluate how much money you take in and how much money you spend.

Get to know the value of compound interest. It’s the interest you earn on your initial investment plus all the interest that accumulates over time. It makes your investment grow at a faster rate than simple interest, which is interest earned only on your original investment.

Keep it going. If you get a raise at work, bank it. If you pay off your car, bank the monthly payments. If you’re not sure you’ll remember to make the deposits, consider automated transfers from your checking account to your savings or investment account. That way you never even notice it. If you were able to live on less before, you can continue to.

Comments

The Truth in Savings Act (TISA) uses the compound method to express the growth of savings. A favorite method for explaining to children 10 years old and older to learn compounding is the increase of savings starting with a dollar on which the balance is doubled every year for 12 years. So, they usually can say, without writing, 2, 4, 8, 16, 32, 64, 128, 256, 512, 1024, 2048, 4096 [2 to the 12th power.] Since $1 was the original principal, then $4095 is all interest the children should be taught that the percentage rate of $4095 on $1, is 409,500%, which is called the Annual Percentage Yield (APY) for each of the 12 years. Now if they borrowed $1 with the same doubling each year rate, the calculation of the Annual Percentage Rate (APR), [actually the Nominal APR] is stated in the Truth in Lending Act (TILA) at Appendix J(b)(1) as the rate for a unit-period multiplied by the number of unit-periods in a year. Well the rate for a year is 100% and there are 12 years, so the Annual Percentage Rate is 1200%. Do you detect something is amiss? It is the fact that the APR method in TILA is mathematically-false as is astronomically egregious.

Saving is the best thing to prove yourself that you are smart enough to plan for your better future. But is not all about money and not spending it…. Beside this one has to do some smart investments too… if your get less then it could be a problem, but getting a little more on what you actually have is brilliant.

Leave a Comment

Comment Policy

This is a moderated blog; we review all comments before they are posted. We expect participants to treat each other and the bloggers with respect. We will not post comments that do not comply with our comment policy. If a submitted comment includes a link to a commercial website, we will delete the link and post the comment. We won't edit comments except to remove links.

Comments submitted to this blog become part of the public domain. To protect your privacy and the privacy of others, please do not include personal information. Also, do not use this blog to report fraud; instead, file a complaint.

Read Our Privacy Act Statement

It is your choice whether to submit a comment. If you do, you must create a
user name, or we will not post your comment. The Federal Trade Commission Act
authorizes this information collection for purposes of managing online
comments. Comments and user names are part of the Federal Trade Commission’s
(FTC) public records system, and user names also are part of the FTC’s computer
user records system. We may routinely use these records as described in the
FTC’s Privacy Act system notices. For more information on how the FTC handles
information that we collect, please read our privacy policy.